Tuesday, May 12, 2009

Who Has the Home Court Advantage at Notre Dame?

The two most important economic forces in politics are comparative advantage and the free-rider problem, and both of them are critical at Notre Dame's graduation this weekend.

Comparative advantage says that everyone is talented at something, where "talent" is measured in relative terms. People, businesses, and organizations tend to engage in activities where they have their advantage. Political groups recognize this, and play in the political arenas where they have comparative advantage (and attempt to reshape the arena to suit that advantage).

For example, the elderly (more specifically, the retired) have more time on their hands than do working-aged people. Working aged people have more money than time, which is why the American Association of Retired Persons has always been important advocates of limiting the role of campaign funds in political campaigns -- a money intensive political campaign suits the political comparative advantage of persons who are not retired.

The free-rider problem says that large groups are difficult to mobilize, because any one member might recognize that he has little effect on the group's aggregate effort. But the group is just the sum of its members, so with most of the members slacking off, the group accomplishes little.

Thus, we have the economic story at Notre Dame this weekend, where President Obama will give a commencement address and many domers are protesting.

It is clear from the video and news stories that Obama opponents have been mobilized by this event. Obama opponents have always been there, but the free-rider problem ensured that the vast majority of them did nothing to demonstrate that opposition -- until Notre Dame. On that account, President Obama may wish that he had initially declined (or at least ignored) Notre Dame's invitation: the sleeping dog would still be sleeping.

However, President Obama is the best orator I have seen in my lifetime. I assume he has given commencement addresses before, but virtually everyone ignored them because those addresses were not newsworthy. Not so this weekend -- the Notre Dame address will be seen by millions. On that account, domers may wish they had attacked Obama in some other arena.

So a lot is riding on this commencement address. But if you are against Obama, don't tell anyone about the occasion until it's over and the news media have stopped playing the clips of his address!

“A close examination of their finances shows that the Obamas were living off lines of credit along with other income for several years until 2005, when Obama's book royalties came through and Michelle received her 260% pay raise at the University of Chicago.”

Supply and Demand (in that order)

The basic tools of supply and demand help immensely to understand and predict everyday events in our world. These days, many of those events are related to the Redistribution Recession of 2008-9. But I also look at other issues related to fiscal policy, labor economics, and industrial organization.